After 35 years of stockbroking for some of the biggest houses and investors in Australia and the UK, the Secret Broker is regaling Stockhead readers with his colourful war stories — from the trading floor to the dealer’s desk.

The old saying that you need the ‘luck of the Irish’, must come from all those pints of Guinness they consume.

The pure Irish water must give everyone over there a happy glow and rub off on some of the things they touch.

I admit there are times where a bit of luck has helped me in certain situations. Not all the time but when things have been out of my control.

Once, when I was looking to buy a house, I had to liquidate a few shares so I was liquid enough to be a cash buyer.

After I had done what was needed, the market had a correction of about 25%, which I would like to tell everyone was skill, but in fact it was just the luck of the situation.

I think I put on about two stone drinking all the Guinness I could for the next couple of months, trying to keep the Irish luck going.

So, it is interesting how others have had a massive stroke of luck due to situations outside of their control.

When Enron imploded after their accounting fraud, in 2001, one person had a lucky windfall of US$280m.

Lou Pai was born in China and ended up in America as one of the most trusted and highest ranking executives in Enron.

While CEO of one of Enron’s subsidiaries, he earnt himself around US$100m in salary. He also received an enormous package of stock options.

The only problem was that during this time, Lou became addicted to strip clubs. Every night after work he would visit the nearest one to his office.

He even held meetings in them. The strippers couldn’t believe that this mild-mannered man was an actual CEO, even though everything was put on the corporate credit card.

As Enron stock went up, so did his obsession, which eventually led to him getting into trouble, as he fell in love with one of the strippers, Melanie Fewell.

Both were married, but he obviously wasn’t drinking enough Guinness one night, as he got her pregnant.

As soon as his wife found out she filed for a divorce. Enron also took a high moral stance on the situation.

They didn’t push him out but they made his tenure very difficult. He had created a nightmare. Expense account cut off, stripper pregnant and a divorce.

Nice one!
 

Timing of his life

Now, to pay for his expensive divorce, Lou Pai had to liquidate all of his shares and share options.

At the time Enron was just off its all-time high of US$90.56 a share. His liquidation average was US$72 a share and it amounted to that figure of US$280m.

Two months later Enron was worth US$42 a share and then it fell to US$15 a share. Three months later the company filed for bankruptcy.

So within seven months of being forced to liquidate, he could have ended up with nothing instead of all of those millions.

He paid out his former Mrs and bought a 120-acre farm with the new Mrs Pai with a spare US$100m in the bank.

There’s another story that top that one off though.

Mikhail Prokhorov also owes pretty much his fortune of US$9.8bn to a bit of the old forced liquidation, after his business partner wanted a divorce.

For some strange reason, he didn’t like the fact that Mikhail had hired a private jet with their money, filled it up with eight 20-year-old prostitutes and flew himself and some mates to France for three days of debauchery.

Eventually it got all out of hand and the party was busted up by the French police.

The scandal became such big news in Russia, that Prokhorov’s business partner insisted he sell his holding to him. His business partner was worth a cool US$28bn at the time.

Eventually Mikhail settled for US$7bn in cash and US$3bn worth of shares in one of his ex-partners’ aluminium mining companies.

A few months later, the GFC hit everyone, including his ex-partner, whose wealth promptly fell to US$4bn. As he was cashed up, Mikhail was now the richer of the two. In fact, at that time, Mikhail became the richest person in Russia.

So, if anyone knows of an Irish strip club that serves Guinness and has a private jet, please ping a DM to my Twitter account.

I will pass it on, honestly I will.

(Otherwise my waistline will give me away!)

 

The Secret Broker can be found on Twitter here @SecretBrokerAU or on email at [email protected]

Feel free to contact him with your best stock tips and ideas.